Performativity of Economics: Economics as Politics? A Case Study on the EU ETS
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2024-07-03
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en
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How does economics, often seen as a theoretical discipline, shape real-world policies? This study examines the European Union Emissions Trading System (EU ETS), to analyse the performative dynamics of economics. The EU ETS serves as a historical case study to research how economic theory is translated into policy aimed at addressing the collective issue of global warming. Two hypotheses guide the analysis, while allowing for exploration beyond testing existing theory. The findings reveal the complex interaction between economic theory and political interests. Initial aversion to market-based policies has diminished at the end of last century and the EU ETS has been embraced as a means of cost-effectively pricing emissions to reduce pollution. After implementation, political interventions were found to be crucial in addressing the market mechanism’s effectiveness. However, it also caused some disruption of the internal working of the market. The study uncovers a trend towards depoliticization, with decision-making becoming more reliant on economic theory, technical expertise, and independent regulatory bodies. However, it does emphasize that the EU ETS stays a politically charged arena where stakeholders try to influence policymaking. The insights highlight the ongoing need for political involvement to balance economic theory with real-world complexities.
Keywords: Performativity; European Union Emissions Trading System (EU ETS); Market making; Carbon pricing mechanism; Depoliticisation; Market interventions
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Faculteit der Managementwetenschappen